0001 1 TRANSCRIPT OF PROCEEDINGS 2 BEFORE THE 3 TEXAS LOTTERY COMMISSION 4 AUSTIN, TEXAS 5 BINGO ADVISORY COMMITTEE MEETING 6 7 8 9 10 SEPTEMBER 10, 2019 11 10:00 a.m. 12 AT 13 TEXAS LOTTERY COMMISSION 611 East 6th Street 14 Austin, Texas 78701 15 16 17 18 19 20 21 22 23 24 Proceedings reported by electronic sound recording; transcript prepared by Verbatim Reporting & Transcription 25 LLC. 0002 1 COMMITTEE MEMBERS: 2 William T. Smith III 3 Will Martin 4 Tommy Duncan 5 Jason Pohl 6 Melodye Green 7 8 COMMISSION STAFF: 9 Michael P. Farrell, Director 10 Tyler Vance, Staff attorney 11 Bob Biard, General Counsel 12 13 PUBLIC: 14 Steve Bresnan 15 Chris Keller 16 Sharon Ives 17 Stephen Fenoglio 18 19 20 21 22 23 24 25 0003 1 PAGE 1. Call to order . . . . . . . . . . . . . . . . . 4 2 2. American Pledge . . . . . . . . . . . . . . . . 4 3 3. Texas Pledge. . . . . . . . . . . . . . . . . . 4 4 4. Roll call . . . . . . . . . . . . . . . . . . . 4 5 5. Meeting minutes from 6 Aug 2019 . . . . . . . . 5 6 - Public comment - Approval 7 6. Report on TLC Commissioners meeting (Trace) . . 6 8 7. Discussion and possible recommendations on rules.6 9 and regulations regarding bills passed in 2019 Legislative session (HB914, 10 HB882 & others) - Public comment 11 8. Discussion and possible recommendations on BAC 12 nominations:. . . . . . . . . . . . . . . . . . 66 - Charity Representative 13 - General Public Member 14 9. Any old business . . . . . . . . . . . . . . . 73 - Public comment 15 10. Any new business. . . . . . . . . . . . . . . . 84 16 - Public comment 17 11. Set date for next meeting . . . . . . . . . . . 84 18 12. Adjourn . . . . . . . . . . . . . . . . . . . . 87 19 20 21 22 23 24 25 0004 1 TUESDAY, SEPTEMBER 10, 2019 2 AGENDA ITEM 1 3 CHAIRMAN SMITH: All right. We’ll go ahead 4 and call the meeting to order. 5 AGENDA ITEMS 2 and 3 6 CHAIRMAN SMITH: Start with the American 7 Pledge and the Texas Pledge. Mr. Martin, would you lead us 8 in that, please? 9 (Pledges Recited) 10 AGENDA ITEMS 4 11 CHAIRMAN SMITH: All right, we’re going to do 12 roll call real quick. We do have two people that are not 13 here today. Kim Rodgers was not able to make it due to an 14 illness and Emile Bourgoyne was not here because of a 15 scheduling conflict. They both assured me that they do wish 16 that they could be here and they do wish to continue their 17 duties as members of the Bingo Advisory Committee. Will 18 Martin. 19 MR. MARTIN: Here. 20 CHAIRMAN SMITH: Melodye Green. 21 MS. GREEN: Here. 22 CHAIRMAN SMITH: Tommy Duncan. 23 MR. DUNCAN: Here. 24 CHAIRMAN SMITH: Jason Pohl. 25 MR. POHL: Here. 0005 1 CHAIRMAN SMITH: Trace Smith. We are all 2 here. 3 AGENDA ITEMS 5 4 CHAIRMAN SMITH: Melodye has kindly agreed to 5 be our minute taker for today’s meeting. The meetings from 6 the 6th of August were put online if anybody has any 7 questions or corrections for that. None. Any public comment 8 on the meeting minutes from the last meeting? Okay. Moving 9 right along. 10 AGENDA ITEMS 6 11 CHAIRMAN SMITH: Report on the Texas Lottery 12 Commissioners meeting. We had a good meeting. The 13 commissioners were gracious enough, as you can see, to 14 continue the Bingo Advisory Committee. They thought that it 15 was a good process and that we worked well with staff. And 16 thank goodness Mr. Michael Farrell gave his blessing for 17 that, so thank you, Michael, we appreciate it. And we were 18 lucky enough to be continued. Other than that, it was 19 standard stuff. 20 We approved the HB 8012 and the 882. 21 MR. FARRELL: 882 and 400? 22 CHAIRMAN SMITH: We recommended that those be 23 adopted as staff wrote them, and the commission agreed with 24 that. 25 MS. GREEN: Which bills? The 882 and -- 0006 1 MR. FARRELL: 1200. 2 CHAIRMAN SMITH: 1200, that’s it. 3 MR. FARRELL: Yeah. It’s -- 4 CHAIRMAN SMITH: There any public comment on 5 the Commissioner’s Meeting Report? 6 AGENDA ITEM 7 7 All right. If none, we will go to the next to 8 discussion and possible action on the rules and regulations 9 regarding bills passed in the 2019 legislative session. 10 Including House Bill 914, 882 and others. 11 But before we get to that, Michael, do you 12 want to take the lead on this one? 13 MR. FARRELL: Sure. This is Michael Farrell. 14 One of the things that I want to make sure we -- BAC 15 understood, is part of your charter is to comment on the 16 rules that are coming up. And what we’ve got now in front of 17 you, I handed you out -- it out to you, was 914. Basically 18 the rule changes for 914. And Tyler’s going to go into that 19 in a little more detail. 20 But I also want to impress upon you that it’s time to do 21 an -- it’s time to do the quadrennial review of the Bingo 22 Rules, and that’s when we take a look at all the rules and 23 see if we still need them or not. It’s not necessarily going 24 to change them all or rewrite them all or anything else, it’s 25 just are they still necessary? Are they not necessary? Can 0007 1 What I would like for BAC to do today, and I’m 2 happy to participate in it, is that we create a subcommittee 3 on rule review. Generally with rule review, we do a 4 subcommittee on rule review. You can meet telephonically. 5 I’d say you can meet telephonically, you can meet in person, 6 but it’s -- we do need to kick this off pretty soon, because 7 there’s a lot of rules that are going on and a lot of pieces 8 in play and we want to make sure that we, the BAC, has time 9 to do -- give their input on what they think are necessary 10 and unnecessary rules. 11 When it comes to rewriting the rules we’ll 12 then look at what your input is, just like these rules that 13 are coming up, is what your input is and what you think of 14 it. But you -- we’re treating -- we expect that you’re the 15 industry representatives when we start doing this initial 16 part. 17 Now that doesn’t mean we’re not going to get 18 public comment and we’re not going to let -- we’re not going 19 to still have a hearing and never get public comment. It’s 20 just that we -- commission would like the BAC to play a 21 significant role. 22 CHAIRMAN SMITH: Well, I’m sure we would like 23 to play a significant role. 24 MR. FARRELL: So I’m going to -- on that note, 25 let me introduce Tyler here. 0008 1 The only thing that I’d like to emphasize is that this rule 2 review, again, is just very general. 3 If you guys all have, there was a handout up 4 front here that says Texas Register at the top of it. That 5 was a -- the final product at the last rule review, in 2015 6 and ‘16. And we’re giving that to you all as kind of a 7 template to show you what kind of thing we’re hoping to get 8 out of this. 9 And so what you’ll see is it just goes 10 subchapter by subchapter and it says, This rule is either 11 still relevant or needs to be changed, or needs to be 12 changed, or needs to be deleted and why. It’s not a -- this 13 isn’t really the time to go, you know, Rule 402.411 says 14 blah, blah, blah, blah, blah and this word needs to change 15 and this word needs to change. We can do all that later. At 16 this point it’s just, we need a statement that it needs to 17 change, because whatever. And then once we get done with 18 this, then we’ll go back through with the rulemaking process, 19 and actually change those little words and those little 20 lines. Things like that. 21 So, this template is really good to consider 22 when you’re -- when you’re doing this. One thing that jumps 23 right out to me, that there’s an entire section on licensing 24 that has -- refers to fees and all kinds of stuff that we 25 don’t do anymore. So, for example, that section needs to be 0009 1 questions in this process, we’re happy to work with you and 2 legal’s happy to work with you. But, I just want to 3 emphasize that it’s kind of like a drive-by look at all the 4 rules, whether it needs to stay, go, or be changed. 5 And we’re going to be kicking this off at the 6 next October 10th meeting, and then we have 6 months from 7 then to finalize it and, of course, the sooner the better. 8 So we’re hoping to get you all’s recommendations by the end 9 of the year on this. 10 CHAIRMAN SMITH: So, just to clarify, this is 11 a template, this is not actually the rules that you’re 12 looking at changing, right? 13 MR. VANCE: Yes, sir. Well, I -- they are. 14 So this is -- this is a copy of the 2016 Rule Review of the 15 Bingo Chapter. 16 CHAIRMAN SMITH: Okay. 17 MR. VANCE: So when you read through these, 18 these are all the rules that apply to y’all, and this is just 19 the way it was handled last time. And this time it should 20 look very similar except, you know, certain sections will 21 have different outcomes. 22 But I just, again, just wanted to provide 23 this. So if you’ll read under each section you’ll see it 24 says, you know, for example, Section 402.101 remains 25 necessary. The reasons for initially adopting the rule 0010 1 is a duty imposed by the Bingo Enabling Act. That’s it. 2 So it’s not, at the time, like, Oh, we’d like 3 to change the Bingo Advisory Committee to have that extra 4 member here and an extra member -- maybe change this process. 5 It’s just kind of a look at this rule very broadly and does 6 this rule still continue to serve it’s function? And if not, 7 does it need to be deleted or does it need to be amended? 8 And so those are the kind of conclusions we want y’all to 9 reach. 10 CHAIRMAN SMITH: Is everybody clear on what 11 they’re asking? Yeah? Tommy? 12 MR. DUNCAN: Yes. 13 CHAIRMAN SMITH: Yes? Okay. 14 MR. VANCE: We’re good. 15 CHAIRMAN SMITH: Okay. Thank you, Tyler. 16 MR. VANCE: Okay. 17 MR. FARRELL: And I think I misled you a 18 little bit. I gotta read what I handed out, I think. But 19 I’ve -- What we’ll get to you -- I’ll get you the link. I’ll 20 print out the -- I’ll print out the section of the link that 21 you said you couldn’t open on the Texas Register. 22 CHAIRMAN SMITH: Yes. 23 MR. FARRELL: I’ll print that out and email it 24 to everybody in the BAC. It’s right in the Texas Registry. 25 It’s just a little tough to find. So I’ll print it out. 0011 1 something like that via email. 2 CHAIRMAN SMITH: So at this time you don’t 3 have any definite rules on this for -- that you’re 4 recommending for 914 for -- 5 MR. FARRELL: No. We don’t have any definite 6 rule changes for 914 other than what’s published right in the 7 Texas Register right now. You’ll get a copy of it. 8 Basically, it talks about everything that the law said that - 9 - House Bill 914 said we had to do. 10 CHAIRMAN SMITH: I mean, has everybody read 11 and seen those yet? I just briefly looked at them. 12 UNIDENTIFIED VOICE: Isn’t that 914 long? 13 CHAIRMAN SMITH: No, no. Not 914, the 14 recommended rules changes from staff. 15 MR. VANCE: So I’ll jump in here. Tyler Vance 16 again. The document I gave you guys last time, these are the 17 drafts, the proposed changes, pursuant to 914, but they 18 haven’t been proposed yet. But they’re going to be proposed 19 in one form or another at the next commission meeting. 20 And so this was kind of the chance for y’all 21 to preemptively comment. I’ve received some comments from 22 some folks, and we have a couple small changes folks provided 23 last month. And we were hoping to get your input on this 24 ahead of time. We have -- we have to send these to the 25 Governor. I believe they’ve already been sent to the 0012 1 I gave them the list that you sent to the Governor. 2 MR. VANCE: Yeah, that was -- okay, yeah. And 3 so, I mean, that can certainly change before it gets proposed 4 and then once they get proposed at the October meeting, there 5 will be the open comment period. We’re going to have a 6 public hearing on that, so this isn’t your last chance, by 7 any means, to comment on these proposed rules, or the rules 8 that will be proposed, rather. 9 MR. FARRELL: So -- 10 CHAIRMAN HUGHS: Okay. Can I get a copy of 11 that, Michael? 12 MR. FARRELL: What’s that? 13 CHAIRMAN HUGHS: Do you have any extra copy of 14 that? 15 MR. FARRELL: I do not. 16 CHAIRMAN SMITH: Okay. 17 MR. FARRELL: I can get you a copy if -- Tyler 18 -- 19 UNIDENTIFIED VOICE: Well, I got a copy right 20 here. 21 MR. FARRELL: Okay, we’ll get copies of that. 22 CHAIRMAN SMITH: I think -- I think it would 23 probably help, if it’s all right, Michael -- 24 MR. FARRELL: Oh, absolutely. 25 CHAIRMAN SMITH: Just to possibly request that 0013 1 MR. FARRELL: Oh, absolutely. 2 CHAIRMAN SMITH: Talked about if we could 3 briefly have copies for the general public to look at. I 4 think there’s several people in the audience that are trying 5 to scramble to look that up real quick. 6 MR. FARRELL: All right, easy. 7 CHAIRMAN SMITH: And I’m a paper guy, 8 unfortunately. I’m old school. If it’s easier for me to do 9 this than it is this with the computer sometimes. Getting 10 old. Bresnan. 11 MR. BRESNAN: Steve Bresnan. I have a process 12 question. So, it’s my understanding that the recommended 13 rule changes, although they’ve not been publically discussed 14 yet, have gone to the Governor for this -- the review under 15 the new legislation they passed. 16 Is it -- is it possible in the future -- or 17 let me just ask a process question. So, we’re going to have 18 some, undoubtedly, some comments as part of the regular 19 administrative procedures act procedures. Will you then 20 resubmit those to the Governor’s office for their approval of 21 the -- of the changes? Or what? 22 MR. VANCE: I think Bob’s perspective on 23 notifying the Governor is that unless something changes 24 significantly we’re not going to resubmit it to the Governor 25 that -- and that’s why we sought everyone’s advice ahead of 0014 1 in the future. But we have to send it, of course, and then 2 30 days before proposing it, and then we’ll propose it, and 3 we’ll go through the normal notice and comment process, and 4 if something changes significantly. But we don’t suspect it 5 will. It’s, I mean, it’s still the same people affected, the 6 same rules that have to be changed. It’s just a matter or 7 how they are changed. So I don’t think Bob anticipates 8 having to renotify the Governor’s Office. But it may be 9 possible that we may have to repropose it. 10 MR. BRESNAN: Sure. 11 MR. VANCE: I mean, if they get significantly 12 different. 13 MR. BRESNAN: Understood. Just by way of 14 information, this is -- the legislation that authorized the 15 Governor’s Office to have a, essentially, a veto on rules, or 16 to object before they’re adopted, was a response to an anti- 17 trust case that came out of North Carolina involving the 18 North Carolina Dental Board. I worked on this legislation. 19 And the Governor’s role is to try to ferret out anything 20 that’s anti-competitive in nature. Because there were state 21 agencies in this state and other states that have attempted 22 to use their rulemaking power to either put people out of 23 business, or raise the costs in such a way that it, or lower 24 the costs in such a way, that it would have anti-competitive 25 effect. 0015 1 other agencies are doing the rulemaking, but you’re very 2 early in the process of how that would work. 3 They had an informal process during the last 4 interim, which I participated in, and had a very good 5 experience with the Governor’s Office. But we now have short 6 two points of potential communication. I can’t imagine 7 anything in 914 or anything in these proposed rules that 8 would evoke the -- concerns about anti-competitive actions in 9 particular since this agency is not dominated by market 10 participants. Unlike most dental boards, for example, in the 11 state are dominated by, or in the country, are dominated by 12 dentists. So, anyway, thanks for letting me give that 13 background. 14 CHAIRMAN SMITH: All right, thank you. And 15 we’re waiting on those copies now. 16 MR. FARRELL: Yeah, waiting on the copies. 17 Just while we’re waiting on the copies, we did send out 18 notifications to various counties and cities and 19 municipalities for 914 where they had a vote. We’ve received 20 as of yesterday, I think, we’ve received 23 total responses, 21 21 is yeas and 2 nays. 22 MR. BRESNAN: Really? 23 MR. FARRELL: Yep. 24 MR. BRESNAN: Wow. Who are the nays? 25 UNIDENTIFIED VOICE: Do you have a -- yeah. 0016 1 Colorado City. 2 UNIDENTIFIED VOICE: Good for them. 3 MR. FARRELL: But and I’ve been fielding calls 4 -- just so you know, I’ve been fielding calls from various 5 municipalities and government entities asking about the way 6 914 is and what forms they have to fill out. Whether we have 7 recommended language for their resolutions or not. We don’t. 8 We relay that to them. And I did not give them any legal 9 guidance. I tell them to consult with their lawyers on what 10 they need to do in order to do 914. Make sure they’re in 11 compliance with 914. But I thought you’d find that 12 interesting so far. I expect we’re going to get a flurry of 13 them pretty soon. 14 MS. GREEN: Irving’s (ph) been calling you. 15 They’re confused about the bill. 16 MR. FARRELL: Yes. 17 MS. GREEN: Because when I went to City 18 Council meeting they did ask, Well, this is great, so this 19 quarter I want the money to go to the Red Devil Charity Group 20 across the street from me. And that’s not how it works. So 21 that’s telling me -- so I’m going to go the work session, but 22 they said they did call here. I said, Well, I’m sure that 23 will explain everything. What time is your work session? So 24 I’m going to take the bill and be very -- but they do not 25 understand the bill. 0017 1 MS. GREEN: Yeah. 2 MR. FARRELL: I think they understand it a 3 little better. But we -- 4 MS. GREEN: Yeah. 5 CHAIRMAN SMITH: Thanks. 6 MR. FARRELL: How many people need these? 7 MS. GREEN: Seven. 8 MR. FARRELL: Seven? 9 MS. GREEN: When is the deadline for letting 10 you know? It says November 1st, but if they notify you on 11 December 1st, and they did vote for it, is that -- 12 MR. FARRELL: No. The law says Lottery 13 Commission needs to be notified no later than November 1st. 14 So if they aren’t notified on November 1st, they aren’t in 15 compliance with the law. 16 MS. GREEN: Somebody calls you November 5th 17 and says -- How are they supposed to notify you? By -- 18 MR. FARRELL: We -- okay. What we did was we 19 sent up letters to all the government entities. We sent a 20 letter in July, somewhere around July 17th. We told them, 21 basically, 914's coming. And we sent it to -- we sent it to 22 the County Judge, we sent it to the Commissioners Court, we 23 sent it to the County Superintendent and we sent it to the 24 finance person in the county. For a city we sent it to the 25 mayor, we sent it to the attorney, we sent it to the finance 0018 1 Any bounce-backs we got which is undeliverable 2 by the post office, we returned and we double checked, we 3 made some calls, and resent the letter. And we did the same 4 thing to the second letter that went out on the 26th of Aug - 5 - 26th of August, I think. We did the same thing the second 6 letter to the same folks and to anybody, any organizations 7 that list our point of contact, we made sure the point of 8 contact was added to our list. Why? We want to make sure 9 they got good coverage so they don’t get that point. 10 What we -- what we enclosed in the second 11 letter and in all the email responses we’ve got for them 12 telling us to vote because an attestation form online right 13 now, but that we created that says, This is how we voted. 14 It’s signed by the relevant authority in the government 15 entity and notarized so that we have this form back. So that 16 it says, Okay, we’ve signed this and we wanted a standard way 17 people to tell if they’ve voted for it or against it. And so 18 that’s what we’ve requested from them. 19 They need to provide that form to us. It can 20 be emailed, it can be faxed, it can be regular mailed. And 21 I’m getting them all the ways, I think. They can -- they can 22 send that to us, but it needs to be here by November 1st. We 23 will be probably doing another email week of the 23rd to say, 24 Hey, your deadline’s coming up, you need to vote. 25 CHAIRMAN SMITH: All right. We’ve all got our 0019 1 add, that we did send out a mailing to the -- all the -- all 2 the conductors and the officers. We sent it out to all the 3 -- all the licensed organizations, to various -- and even we 4 had an email addressed to the licensing organization. Got an 5 email saying this is -- this is what’s coming up in 914. 6 Things are going to change. 7 We’re still, with some of the rules and some 8 of the other -- making sure we got all the forms in place and 9 making sure the computer calculations are right, we’re going 10 to be setting out another letter pretty soon, hopefully by 11 the end of September, that’s going to have some more 12 information on it. It also should have some dates that 13 you’re allowed to do certain things, like file electronically 14 or pay by check in the mail or not because the law has 15 specific hard dates on it, and we don’t want to -- want to 16 try to minimize re-work for everybody. 17 CHAIRMAN SMITH: All right. So let’s go to 18 these rules real quick. I want to try to hold out on 914. I 19 think they’re pretty basic, like Michael said. 20 MR. VANCE: We’ve got a few correct -- few 21 changes that I’ll note when we’re -- if I can get to it. 22 CHAIRMAN SMITH: All right. If you’ll look on 23 that second page it says, Rule changes pursuant to House Bill 24 914. There any changes on this one, Tyler? 25 MR. VANCE: There are not. 0020 1 letter with the cross through it is what they’re taking out. 2 And the red letters underlined is what they’re replacing it 3 with. So we’re going to go on this section from -- it’s a 4 length from a provisional worker or state resident from 14 to 5 30 days. Has anybody got any issues with that? Okay. 6 Anyone from the public have any issues on that one? Okay. 7 Let’s go down to section 3. Section allows 8 for sale of bingo cards, pulltabs and card minders up to one 9 hour before an occasion. It also allows for a single 10 accounting of pulltab sales that occur over consecutive 11 occasions conducted within one day. 12 Note that G3 is being changed here to section 13 5 regarding the elimination of the prize fees on merchandise 14 items. They’ll be replacing the language with consecutive 15 bingo occasions within one day shall mean more than one bingo 16 occasion conducted by an organization within a 24-hour time 17 period without any intervening occasions conducted by another 18 organization commencing at the start of the first occasion. 19 Anyone got any issues on that? Questions? 20 MR. DUNCAN: What section are you in? 21 MR. BRESNAN: 402.3A. 22 MR. VANCE: He’s on page two at the -- at the 23 bottom. Yeah. 24 MR. BRESNAN: Did you put in there on this 25 section three you can’t redeem the pulltab? I don’t see that 0021 1 of the changes. You know. 2 MR. BRESNAN: Oh, okay. 3 MR. FARRELL: You know, the only thing I would 4 add to that one section, this is Michael Farrell. The only 5 thing I’d add to what that one section is how are you going 6 to account for it when you talk about a 24-hour period? 7 Because you do run over months, and you do run over quarters 8 in 24-hour -- possibly even 24-hour period. So, not that 9 it’s against to carry it over, but just as a -- as a -- I 10 would call it a technique of how you’re going to keep your 11 books. You going to have -- you may have to worry about 12 that, you know, quarterly reports going over a quarter. 13 MR. VANCE: Yeah. The -- so the purpose of 14 this rule is there is some confusion as to what it means to 15 conduct consecutive bingo occasions during the day. 16 Particularly in a unit the issue is whether a unit counts. 17 But the problem is the law says consecutive 18 occasions conducted by an organization within one day. So we 19 felt the need to define that phrase to make it clear that 20 it’s only back-to-back occasions by a single organization. 21 So a unit could take advantage of this, but they’d have to 22 use the same organization license back to back. You can’t 23 have organization 1, organization 2, and organization 3 and 24 then close out all the pulltab sales. And that’s, again, 25 that’s because of the law says consecutive occasions 0022 1 CHAIRMAN SMITH: Tommy, comment? 2 MR. DUNCAN: No. I’ve already commented. 3 It’s, you know, we’ve already been through it. 4 CHAIRMAN SMITH: Okay. All right. 5 MR. DUNCAN: But what will you -- you do have 6 a change where’s that come up? Is that a redemption? 7 MR. VANCE: There’s a change on the next one. 8 Yep. 9 MR. DUNCAN: Oh, okay. 10 MR. VANCE: Yeah so next -- on the next page 11 it talks about, the first line, A licensed authorized 12 organization may bundle bingo tickets. That was already in 13 there, we just moved that around. And there’s going to be 14 another section below that was just moved around, and there 15 were not changes. 16 But the new language there is, Pulltab tickets 17 may be sold one hour before occasion. And we’ve also added, 18 And may only be redeemed during an occasion. There’s also 19 some confusion out there as to whether a pulltab can be 20 redeemed during that one-hour period before an occasion, but 21 it cannot, because the act says that a prize can only be 22 awarded during the occasion. So you can sell them all day, 23 or not all day, but you can sell them for an hour before the 24 occasion, and if somebody wins, they’ve just got to hold on 25 to it and they can’t be redeemed until your occasion starts 0023 1 MR. DUNCAN: The unintended consequence of 2 that is the redundant rule where you can, six hour sessions, 3 you can beat that one hour. 4 MR. VANCE: Yeah. Yeah. 5 CHAIRMAN SMITH: Okay. All right. Nobody 6 here on that one. Any comments? All right. Let’s get down 7 to the next one. Cleared that one up. Let’s go down to 8 number eight. 9 MR. VANCE: Well, I’ve got a correction on 10 four. And this one’s going to repeat itself several times. 11 CHAIRMAN SMITH: Okay. 12 MR. VANCE: But it’s that if you’re going to 13 take advantage of this accounting for sales over consecutive 14 occasions, then you must also account for your prizes at the 15 same time. That way we don’t have the problem of accounting 16 for prizes awarded in one occasion and then you’re losing 17 money and then prizes awarded in the second occasion, and 18 then you don’t account for the sales until the last occasion. 19 So if you -- if you decide to account for all 20 sales at the conclusion of the last consecutive occasion, 21 then that’s also when you must account for -- for the prizes 22 awarded. 23 MS. GREEN: Amen. 24 MR. DUNCAN: So you’re not showing short in 25 the first session. 0024 1 MR. DUNCAN: That’s a good. 2 MS. GREEN: We’ll do that. 3 MR. DUNCAN: That’s a good bit. 4 MS. GREEN: Yep. 5 CHAIRMAN SMITH: Right. 6 MR. VANCE: And that’s any -- that phrase pops 7 up three or four times in here where you can -- you can 8 account for tickets at the end of -- and then the new 9 language would be, But you must also account for prizes at 10 that time. 11 CHAIRMAN SMITH: Got you. Okay, we’ll jump 12 down to number eight, then. A winning instant pulltab bingo 13 ticket must be presented for payment through a licenced 14 authorized organization bingo occasions, at which the instant 15 pulltab bingo ticket is available for sale. A winning 16 instant pulltab ticket that was sold during the one-hour 17 period prior to an occasion must be presented for payment at 18 that occasion. 19 MR. VANCE: Okay, so that first sentence was 20 already in section 1, but we just moved it. And then that’s 21 just to make clear that if you sell -- if you sell a ticket, 22 a pulltab ticket, in that hour before an occasion, you need 23 to redeem it at that occasion, the next subsequent occasion. 24 CHAIRMAN SMITH: So let me ask a quick 25 question here. Let’s say we’ve got two occasions back to 0025 1 CHAIRMAN SMITH: And I start selling an hour 2 before, and I haven’t sold that box in the first occasion, 3 can you still report it in the second occasion? 4 MR. DUNCAN: Yeah. Because you’re back to 5 back same charity. 6 CHAIRMAN SMITH: Okay, so that works then. 7 MR. VANCE: Right. 8 CHAIRMAN SMITH: Okay. 9 MR. VANCE: And it would, again, it would be 10 sales and prizes are all accounted for at that last. 11 CHAIRMAN SMITH: Yeah, okay. So keeping track 12 -- 13 MR. FENOGLIO: -- that language that you -- 14 that Trace just read, you would revise slightly. 15 MR. VANCE: I believe that in -- 16 MR. FENOGLIO: That second sentence says you 17 couldn’t do what Trace just said. 18 MR. VANCE: Well, the second sentence has to 19 do with the person presenting it for payment, so that it can 20 only be paid out. I thought Trace was asking when he’s got 21 to account for it. Now if you’re asking -- so your question 22 is can you pay it on the second -- if I come in in hour one, 23 I buy the pulltab, and I sit around for eight hours into the 24 second occasion and it’s like that’s when I’m going to redeem 25 it? 0026 1 CHAIRMAN SMITH: Well, if you redeem it in 2 that first session, you’d have to account for it that 3 session. 4 MR. VANCE: Right. 5 CHAIRMAN SMITH: Right? 6 MR. VANCE: You don’t have to. If you’re 7 doing the consecutive occasion accounting system you could 8 wait until the end of your last occasion to account for it. 9 CHAIRMAN SMITH: That’s not what this is 10 saying to me. Maybe I’m stupid. And maybe I’m -- 11 MR. FARRELL: I think what you’re talking 12 about, Trace, is if you -- if you were to sell to me a 13 pulltab ticket an hour before the first occasion. 14 CHAIRMAN SMITH: That’s correct. 15 MR. FARRELL: You’ll be running two occasions 16 with the same charity. 17 CHAIRMAN SMITH: Charity. 18 MR. FARRELL: I can’t go home, have dinner, 19 watch TV, come back for the second occasion and redeem that 20 pulltab at the second occasion. I have to redeem it at the 21 first occasion when you sold me the pulltab. 22 CHAIRMAN SMITH: Right. 23 MR. FARRELL: For accounting purposes if 24 you’re running the same box over two occasions, right, one 25 occasion ends you can still pre sell whatever you’ve got left 0027 1 prizes, at the end of the second occasion. 2 So there’s two things that are going on, one 3 is redeeming the pulltab, and the other is how you account 4 for the pulltabs you sold. 5 CHAIRMAN SMITH: Right. 6 CHAIRMAN SMITH: I think there is a -- there 7 may be an operational issue with this statement, is what I’m 8 getting at. 9 UNIDENTIFIED VOICE: Okay, okay. 10 CHAIRMAN SMITH: So, Melodye, follow through, 11 well, follow through with me. If I’m selling pulltabs an 12 hour before my first occasion, and somebody hits a big 13 winner, they want to get paid right then in that first 14 occasion. Okay? It says here that you have to -- that the 15 ticket must be presented for payment during the licensed 16 authorized organization’s bingo occasion at which the instant 17 bingo pulltab ticket is available for sale. So you have to 18 pay it in that first session. 19 UNIDENTIFIED VOICE: And that’s been the -- 20 CHAIRMAN SMITH: So -- 21 MS. GREEN: Yeah. So it be available the 22 second session, too? 23 UNIDENTIFIED VOICE: I see what you’re saying. 24 CHAIRMAN SMITH: Right, but if you’re have -- 25 if you’re going to record that on your second session, you 0028 1 have to keep separate session occasion paperwork. 2 MR. DUNCAN: Not on pulltabs anymore if you’ve 3 got the charity back to back. That’s what it’s saying. 4 CHAIRMAN SMITH: Right. But operationally you 5 would be required to record the -- that prize winner in your 6 first occasion. 7 MR. DUNCAN: Right. And that’s where he said 8 he just made the change that you’re not reading that -- 9 CHAIRMAN SMITH: Okay. 10 MR. DUNCAN: The prizes will have to be 11 recorded for the second session. Just so you don’t show 12 short for the first session, you see. 13 CHAIRMAN SMITH: Right, exactly. 14 MR. DUNCAN: But I think, didn’t you just make 15 a change in the previous one on that? That you can -- your 16 prize payouts have to be recorded at the end of the night. 17 MR. VANCE: Correct, yeah. 18 MR. DUNCAN: Just like your pulltab records 19 are actually? 20 MR. VANCE: Correct. If you’re going to -- if 21 you’re going to do the consecutive occasion accounting, then 22 you must also -- the law just says you must account for 23 sales, but we’re going to interpret that broadly enough to 24 include it, sales and redemptions, must all be accounted for 25 at the same time, at the end of -- 0029 1 MR. VANCE: Yeah. 2 CHAIRMAN SMITH: Then maybe I’m just missing 3 something, and maybe we need to get our big red crayon out. 4 Because I think what this is saying to me and what 5 operationally it’s doing is two different things. You have 6 to record -- if you pay out a winner on the first occasion, 7 you must record it on the first occasion. Correct? 8 MR. VANCE: Not necessarily. If you -- if 9 you’re doing the consecutive occasion accounting system where 10 you account for sales at the very end, you account for the 11 winner at the very end as well. Even if he claims it in the 12 first. He claims the prize in the first occasion, or you 13 sold tickets in the second or the first occasion, you don’t 14 account for those until the end of the last occasion within a 15 24-hour period. 16 MS. GREEN: Why did Michael say that he could 17 buy a tab, go home, watch the Cowboy game, come back, and 18 redeem that tab? Why couldn’t he do that? This is the same 19 thing you just said. If I buy it first occasion I can redeem 20 it second. Because that’s our issues -- if you’re still -- 21 MR. DUNCAN: If the charities are consecutive. 22 MS. GREEN: Right. Consecutive. And if 23 you’re still selling the tabs. But why couldn’t you do that? 24 MR. VANCE: I don’t see why not. It’s just so 25 -- the old rule that was in place that I just removed said 0030 1 pulltab bingo is available for sale. 2 Okay. So yeah, it’s the same tickets 3 available in multiple occasions, it can be redeemed in 4 multiple occasions. 5 MS. GREEN: Right. 6 MR. VANCE: That’s right. 7 MS. GREEN: Okay, Okay. We’ll have to look at 8 that. 9 MR. VANCE: Well, so what I’m going to do, 10 then, is on eight, that -- on eight, that second sentence, 11 I’m going to take that out. Because now we’ve also got in a 12 couple places where we’ve made it clear that the real issue 13 that we’re trying to resolve with that is that that ticket 14 can only be redeemed during occasions. 15 CHAIRMAN SMITH: Right, okay. 16 MR. VANCE: And so that first sentence still 17 takes care of if it’s the same ticket sold over multiple 18 occasions, then you can redeem it at any of those occasions. 19 CHAIRMAN SMITH: Yeah, okay. 20 UNIDENTIFIED VOICE: By the same charity. 21 UNIDENTIFIED VOICE: Yeah. 22 MR. VANCE: By the -- right. Or by licensed 23 organization occasion and -- occasions at which the instant 24 ticket is available for sale. Yeah. 25 CHAIRMAN SMITH: Okay. So you’re striking 0031 1 CHAIRMAN SMITH: Right. 2 MR. VANCE: The second sentence starting with, 3 A winning instant pulltab bingo ticket -- 4 CHAIRMAN SMITH: Okay, got it. 5 MR. VANCE: We’ll take that one out. 6 CHAIRMAN SMITH: Got it. 7 MR. VANCE: And then, like I said, so there’s 8 an addition, like, on one, and there’s going to be a couple 9 others where it’s -- or I think one might be the only one. 10 Yeah, where it’s clear that pulltab tickets may be sold up to 11 one hour before an occasion, but they may only be redeemed at 12 the occasion. And that’s what we were trying to do with this 13 sentence on -- 14 CHAIRMAN SMITH: Meaning you cannot redeem an 15 hour before the occasion. 16 MR. VANCE: Correct. 17 MR. DUNCAN: Till your license starts. 18 MR. VANCE: Right. But you can redeem a same 19 ticket to the same organization at a different occasion, 20 right. 21 CHAIRMAN SMITH: Okay. All right, let’s get 22 down to number nine. Except that an occasion that conducts 23 consecutive bingo occasions during one day may account for 24 and report all of the pulltab bingo ticket sales for the 25 occasions as sales for the final occasion. 0032 1 MR. VANCE: And if you choose to do so you 2 must also account for prizes. 3 UNIDENTIFIED VOICE: Gotcha. That makes 4 sense. 5 CHAIRMAN SMITH: Next page on G, Records. 6 Except an organization that conducts consecutive bingo 7 occasions during one day may account for and report all of 8 the pulltab bingo ticket sales for occasions as sales for the 9 final occasion. I don’t think anybody has a problem with 10 that; with the change. 11 Number three, licensed authorized 12 organizations must maintain perpetual inventory of all 13 pulltab bingo games. They must account for all sold and 14 unsold pulltab bingo tickets, and pulltab bingo tickets 15 designated for destruction. The licensed authorized 16 organization will be responsible for the gross receipts and 17 prizes associated with unaccounted for pulltab bingo tickets. 18 And I think they’re just striking the prize fee on that. Is 19 that correct? 20 MR. VANCE: Correct. 21 CHAIRMAN SMITH: All right. All right, next 22 page. C-4. Separate deposit must be made for each bingo 23 occasion conducted. Additionally, all sales and prizes must 24 be reported in accordance with the rules. They’re striking, 25 As on records for the occasion on which they’ve occurred. 0033 1 unit thing be fixed legislatively? Like that deposit thing? 2 MR. VANCE: It would have to -- yeah. It 3 would have to be done legislatively. But a unit could, 4 theoretically, use the same organization license 5 consecutively and do this. 6 MR. DUNCAN: Some units may only have four 7 charities, or, you know, five. 8 MR. VANCE: Right. 9 MR. DUNCAN: And they can’t get every day in. 10 MR. VANCE: Right. 11 MR. DUNCAN: But that can be done in a fix, 12 though, legislatively. 13 MR. VANCE: Legislatively, yeah. It’ll have 14 to -- the -- what you would do legislatively is the unit 15 thing, give units three days to deposit, and also give units 16 -- you would change from consecutive occasions conducted by 17 an organization to, By an organization or by a unit. 18 MR. DUNCAN: Got you. 19 MR. VANCE: Yeah. Something like that. 20 MR. DUNCAN: Did you get that? 21 MR. VANCE: He’s got it. 22 MR. DUNCAN: I’m trying to look at Steve over 23 there. No he got it, he’s writing it down. 24 CHAIRMAN SMITH: Any comment from the public 25 on any of that? No? All right. Let’s skip down to 402.503, 0034 1 the end of the second business day after the bingo occasion 2 for units as required by occupations code 201.435. Comment 3 on that? 4 MR. DUNCAN: I think we already -- he had 5 already got that taken care of there. 6 CHAIRMAN SMITH: Yeah, all right. 402.706, 7 for organizations -- that’s a capitalization deal there -- 8 changing that to the third business day, where units deposits 9 were made later than the end of the second business day 10 following the day of the bingo occasion on which the receipts 11 were obtained. Striking, except as provided for by 12 subsection (B)(1). Any questions or issues on that from 13 anyone? 14 402.200, taking out prize fees must be 15 collected on merchandise and non-cash prizes. Cash bingo 16 prize includes cash, coins, checks, money orders, or any 17 other financial instrument that’s convertible to cash. It 18 includes any stored-value card, ticket, certificate or 19 similar item that may be used to purchase goods and services. 20 Does not include a card, ticket, certificate, or similar item 21 that does not have a stored value and is only redeemable for 22 a specific good or service. These are all -- 23 MR. VANCE: So this one’s been changed a 24 little bit. I eliminated -- the word stored value card is 25 defined in the Business and Commerce Code, which doesn’t 0035 1 somewhere else. And so its’ going to be something -- I 2 don’t’ have it verbatim, but it includes any card or item 3 that has a pre-assigned value that diminishes per use. 4 The idea here is that if you have a gift 5 certificate, like one free car wash, that’s merchandise, so 6 naturally there’s no prize fee. But if you have $50 at Joe’s 7 Car Wash to be used however you want to use it. You want to 8 go in and buy an air freshener 25 times, that’s -- a card 9 with a pre-assigned value, or maybe it’s a gift certificate, 10 it’s not even a debit card, but it has a pre-assigned value 11 that can be redeemed in a number of different ways and that 12 the value of that thing diminishes every time you’d use it. 13 As opposed to a, you know, we get this 14 question, What if I want to go to Texas Roadhouse? $50 at 15 Texas Roadhouse we’re going to treat it like cash under this 16 rule. One free dinner at Texas Roadhouse is merchandise, 17 because it’s not -- there’s not a monetary value assigned. 18 CHAIRMAN SMITH: Can’t go back again. So not 19 allowed is the stored value, is what you’re saying. 20 MR. VANCE: Correct, yeah. And that’s where 21 we’re going -- and the purpose of this here, is that I think 22 we and everyone else realizes that if we allow these kind of 23 prepaid -- if you’re allowed to have a $500 prepaid card, 24 there will be no cash prizes, and there will be no prize 25 fees. And, you know, that would be an absurd interpretation 0036 1 eliminate prize fees more or less all together, eventually. 2 Once everyone realized that, I don’t have to pay prize fees 3 on a debit card, I’m just going to hand out $500 debit cards. 4 MS. GREEN: I’m sorry. Yeah. Im reading this 5 it says that you’re going to charge the -- a bingo gift 6 certificate is treated as cash. So -- it’s not? 7 MR. VANCE: No, no. It says -- no. Bingo 8 gift certificates are specifically excluded. And if you see 9 in the next section where it said, And five percent of -- 10 MS. GREEN: So this is certificate. 11 MR. VANCE: Yeah. So, like, a bingo 12 certificate’s only redeemable for -- here’s your certificates 13 for a dauber and a card machine. Bingo certificates are only 14 redeemable for bingo products, and bingo products are 15 specifically excluded from prize fees. 16 So a true bingo gift certificate which is only 17 for bingo products will never have a prize fee attached to 18 it. 19 MS. GREEN: Right. Well, you said a bingo 20 paper and a dauber. What if there was something that’s not a 21 bingo product? I mean, Steve could sell those out of his 22 car, if he wanted to. So -- 23 MR. VANCE: So this would be a pretty narrow 24 exception. If it was a bingo certificate to your hall for 25 $100 to be used on bingo products, and exclusively on bingo 0037 1 prize fees on bingo products. 2 But if it was $100 for my hall and you can use 3 some of it at the food stop and some of it for a t-shirt or 4 whatever, then that’s going to be an open-ended cash bingo 5 prize. I think it’s -- 6 MR. DUNCAN: So no dauber, because it’s an 7 unregulated item. So -- 8 MR. VANCE: No. A dauber is a bingo product. 9 There’s no prize fee associated with the -- 10 MR. DUNCAN: Okay, but it is an unregulated 11 item. 12 MS. GREEN: What about bingo bag? 13 MR. VANCE: Bingo bag is not. Yeah. So it’s 14 daubers, card minders, paper and pulltabs. 15 MR. FENOGLIO: But, Tyler. 16 MR. VANCE: Yes, sir. 17 MR. FENOGLIO: The statute says merchandise, 18 and a t-shirt is merchandise. 19 MR. VANCE: What does it say? Is it -- is it 20 including but not limited to? Is that --? 21 MR. FENOGLIO: A fee collected does not apply 22 to the merchandise prize, organizer prize, for that bingo 23 game. Included is -- the including is that we know under the 24 code is by way of example. So a t-shirt, it’s -- that’s not 25 cash. 0038 1 bingo gift certificate can only be redeemed for bingo 2 merchandise. Right? Not any merchandise, but bingo. 3 MR. FENOGLIO: But the statute in 914 that we 4 passed says -- 5 MR. VANCE: Right. 6 MR. FENOGLIO: A merchandise prize. 7 MR. FARRELL: Right. Stephen, I agree with 8 you. Let me -- what you’re saying is that you want to award 9 as a prize for the bingo occasion a bingo bag from Flamingo 10 Bingo. 11 MR. VANCE: No prize fee. 12 MR. FARRELL: There’s no prize fee attached. 13 I’m sorry, that’s the only one that came up. It’s no prize - 14 - if you want to do it there’s no prize fee attached to that. 15 MR. FENOGLIO: Right. 16 MR. FARRELL: If you’re giving them a 17 certificate that allows them to purchase bags, snack bar and 18 every, like you said, the stored value that it’s worth $10 19 worth of merchandise that you can buy, that’s the cash -- 20 that would be probably -- that would be a bingo cash prize. 21 Because you’re not using -- you’re not giving away a 22 merchandise, a beany baby, you know, that for merchandise. 23 And a bingo gift certificate, which is 402.503, specifically 24 talks about bingo gift certificates and bingo games, card 25 minders, paper, daubers, those tools used to play bingo. 0039 1 the whole context of things, which is why we’re talking about 2 it, is if it’s got a value that in -- that could decrease and 3 you can do multiple items on it that are not specific, that’s 4 where it turns into a cash prize. Where if it’s an oil 5 change or, you know, you can -- maybe you can take a look at 6 it you can redeem this for a bag or a dauber or whatever you 7 got for Halloween. That -- but there’s no value to it, 8 there’s no -- you can’t use it in multiple places. You can’t 9 do anything else. That would more head toward merchandise 10 and not a gift prize. 11 MS. GREEN: So a certificate for a t-shirt or 12 a bingo bag would be -- as long as the certificate is 13 completely specific about what it can be used for. 14 MR. VANCE: Correct. 15 MR. FARRELL: Right. 16 CHAIRMAN SMITH: So, just to clarify, let’s 17 say that Speedies Oil Change donates a $20 gift certificate 18 to be used as a non-cash merchandise prize. Are you saying 19 that because it has an assigned value of $20 worth of value 20 at Speedies that that’s going to be considered cash? 21 MR. VANCE: That’s, under this rule as 22 written, that would be, yeah. As opposed if it was Speedies 23 -- one free car wash at Speedies, or five free car washes at 24 Speedies. Those are both merchandise. But if it’s got a 25 cash value assigned to it that depletes, $50 at Speedies to 0040 1 redeeming for merchandise and not cash. If there’s no way to 2 get cash off of it. 3 MR. VANCE: Well, yeah. But that’s the same 4 thing as, like, a -- like a $500 Amazon gift card. It can 5 only be redeemed for merchandise, but we’re going to treat 6 that as cash. 7 CHAIRMAN SMITH: Okay. 8 MS. GREEN: Could you give out Amazon -- $500 9 Amazon gift card that says, For this TV only? 10 MR. VANCE: You could give out a gift 11 certificate for a TV. 12 MS. GREEN: But it couldn’t be from Amazon? 13 CHAIRMAN SMITH: I think you’re trying to make 14 sure that -- 15 MR. VANCE: We’re trying to close all the 16 loopholes. 17 UNIDENTIFIED VOICE: It’s important to get it 18 right. 19 CHAIRMAN SMITH: Yeah, and collect some prize 20 fees. Correct? 21 Mr. Vance: Right. We’re trying to preserve 22 some amount of prize fees in this situation. So, yeah, a 23 gifts certificate from Joe’s Electronics for a free 46 inch 24 TV, merchandise. $500 at Joe’s, cash. 25 MS. GREEN: But you want to avoid a world like 0041 1 can get, you know, a $500 TV from Amazon, or a certificate -- 2 here’s a certificate for a TV from Amazon, that’s fine. But, 3 you know, I guess an arguable, well, I don’t know if this 4 would come up, but I’m sure it will, of course, so now 5 everyone -- you know. $500 gift certificate to Joe’s that 6 can only be used to buy a television. I don’t know, that’s, 7 you know -- 8 CHAIRMAN SMITH: I think what one of the 9 issues that we’re going to run into is when we do go buy 10 these certificates or cards, or whatever you want to call 11 them, the problem is, is they go, How much do you want to 12 spend on the card? 13 MR. FARRELL: No and I think -- I think what’s 14 being said, is that you’re -- if you don’t buy the TV, a 15 specific type of TV you’re giving away, it shows up behind 16 your table, or it shows up as a picture of it, or it’s on a 17 flyer. If you say, We’ll give you $500 to spend at Best Buy 18 and you could buy a TV, then that’s a cash prize. So what -- 19 so what you’re going for is trying to avoid the, Well, yeah, 20 I can go to Best Buy for $500 and I could buy anything I want 21 at Best Buy. You’re saying, This is what you’re winning. 22 You’re winning this. 23 MR. DUNCAN: What he’s saying is you can use 24 the $500 Best Buy card 5 times at Best Buy, 10 times, but 25 we’re not going to let you do it. 0042 1 MS. GREEN: No. I understand why you’re doing 2 it. I’m just trying to figure out why that’s -- that that 3 merchandise is now cash. It’s not -- 4 CHAIRMAN SMITH: Well, I can’t speak for every 5 bingo hall in the state of Texas, but I can speak for two. I 6 promise you, if that’s all we gave out as prizes was prepaid 7 gift cards we wouldn’t have a crowd anymore. Cash is king. 8 MS. GREEN: That’s right. I’m just playing 9 devil’s advocate with this. I agree with Trace, I think that 10 cash is what we want. 11 CHAIRMAN SMITH: Is there any other public 12 comment on this section here? 13 MR. BRESNAN: I think, Tyler, this language 14 could have some change to it. 15 MR. VANCE: Yeah it’s got the word, Store 16 Value Card part could have been eliminated. Because that 17 word is defined somewhere in the Business and Commerce Code, 18 I don’t have the citation. And so it’s, in a roundabout way, 19 it’s using the definition of that. It’s a card with a 20 prepaid value that diminishes every time it’s used. You 21 know, in some kind of very -- 22 MR. BRESNAN: I think in light of the fact 23 that there’s going to be some changes in the language, that 24 it’d be appropriate at least for comment after we see the 25 final language. But we understand what you’re trying to get 0043 1 gut the prize fee system, and certainly not with respect to 2 financing for a good portion of operations. 3 CHAIRMAN SMITH: Absolutely. All right, skip 4 on down to bingo gift certificates. Adding the word, and, 5 and taking out the prize fee. And that’s it for 2.503 and 6 511. Taking out prize fees and the word, And. 7 MR. VANCE: Yeah. So the deal with this is 8 that a bingo gift certificate in the -- in the act may only 9 be redeemed to play a bingo game, including instant bingo. 10 And so those will never have a prize fee. So if it’s a true 11 bingo gift certificate, even if it’s, you know, even if it’s 12 $100 in bingo cards, or pulltabs, or whatever, none -- you’re 13 restricted to buy anything that will never have a prize fee. 14 So the certificate itself will never have a prize fee, as 15 opposed to a gift certificate to some other non-bingo thing. 16 CHAIRMAN SMITH: All right. Skip one down to 17 402.500. An organization that conducts bingo in more than 18 one location must report each location separately and include 19 for each occasion the municipality and county where the 20 occasion was held, the local amount of prize awarded, and the 21 prize fees to be distributed to the state and local 22 government where the occasion was held if applicable. 23 MR. VANCE: And so the deal with this, is the 24 prize fee structure can completely change from one city to 25 the next. So if you’re going to be playing in more than one 0044 1 CHAIRMAN SMITH: All right, 402.702. 2 MR. VANCE: So this comes from House Bill 3 1342, which amended Chapter 53 of the Occupation’s Code, 4 which applies to criminal convictions and occupational 5 licensing. 6 Previously, speaking broadly, we would -- we 7 would look at convictions that were directly related to 8 bingo, and we have those defined in our guidelines, within 10 9 years. And then all other offenses which are not defined in 10 our guidelines within five years. And we call this 11 indirectly related offenses. 12 The legislature eliminated all consideration 13 of indirectly related offenses. So now the only things that 14 we’ll look at are the convictions for the offenses that are 15 specified in our guidelines that have been determined by 16 Michael and previous directors and commissioners, that are 17 directly related to bingo. 18 Things currently like fraud. Sorry, fraud is 19 a different -- theft, burglary, assault, yeah, things of that 20 nature. And so, indirectly related things that -- drugs is 21 the big one. 22 Currently if you had a felony drug possession 23 charge, we would treat that as an indirectly related offenses 24 and usually deny the application and let them submit letters 25 of recommendation. Now if we get that, we’re just going to 0045 1 We could, down the line, define felony drug 2 possession as a directly related offense if Michael and the 3 commissioner so choose to do that. But, currently, that’s 4 not a directly related offense. 5 MS. GREEN: Do you have a list of direct and 6 indirect? 7 MR. VANCE: We do. We have -- 8 MS. GREEN: And we’re going to publish it. 9 MR. VANCE: Yeah. Yeah. Yeah, we have new 10 guidelines out there for offense. And then fraud and 11 gambling charges are always just disqualifying permanently. 12 Especially if they’re convictions, but generally so even if 13 they deferred adjudication regardless of when it happened. 14 And then there’s all the directly related 15 ones. And then there’s also a couple new factors in 53 that 16 we have to consider. You can see by what’s been changed. 17 But -- so even if -- even if somebody has a conviction for 18 theft or assault and we want to deny them, by denying them 19 what we’re really doing is asking them to submit letters of 20 recommendation. Because that’s something we want to see. 21 We want to -- and we need to consider how old 22 they were when it happened, how extensive it was, the amount 23 of time since it’s happened, evidence of the person’s 24 rehabilitation, evidence of their compliance with community 25 supervision, and evidence of the person’s fitness, including 0046 1 really big deal here is that we’re not longer allowed to 2 consider indirectly related offenses. 3 MS. GREEN: Okay. 4 CHAIRMAN SMITH: Anybody have any comment on 5 this? Any public comment? All right. Did that complete 6 your list, sir? 7 MR. VANCE: Yes, sir. 8 CHAIRMAN SMITH: All right. Short and sweet, 9 right? Does anyone have any severe objections to any of 10 this? I think if you’d want to sign a merchandise order it 11 might work. You’d want to elaborate on the pulltab stuff? 12 MR. FARRELL: No. I was going to -- we’ve had 13 discussions internally about the pulltab prize when we -- 14 when We finalize it, we’ll push it out that way. Because 15 there’s some disagreement in how you account for it and what 16 the wording needs is -- should say, or -- same thing with, 17 like, gift cards and the like. Is how does it work and so 18 that you stay within the rules for cash prizes or that turns 19 into merchandise. 20 CHAIRMAN SMITH: I think that -- I think the 21 commissioners are looking for a recommendation to go forward 22 on these rules. Am I incorrect on that? 23 MS. FARRELL: I need -- that’s correct. 24 CHAIRMAN SMITH: Okay. Does anyone have any 25 objections to Bingo Advisory Committee recommending these 0047 1 MR. BRESNAN: I’d suggest that you recommend 2 them for publication and public comment, and not as an 3 endorsement of the rules as written. 4 CHAIRMAN SMITH: Okay. 5 MR. FARRELL: I was going to add that the 6 comment period’s open after the commission publishes the rule 7 -- the proposed rules, the proposed -- anybody can make 8 comments on the proposed rules. It doesn’t necessarily have 9 to be the BACs. So if anybody on the BAC disagrees they can 10 make the comment, or anybody from the public can make 11 comments. Anybody in the industry can make comments on what 12 they think the rules should do. 13 MR. BRESNAN: I just think you might want to 14 keep your powder dry so it doesn’t come across to the 15 commissioners that the BAC is good with them just like they 16 are. 17 CHAIRMAN SMITH: Right. 18 MR. BRESNAN: But, clearly, they need to be -- 19 they need to move forward to implement the bill and -- but 20 they’re going to be some comments about how to, like for 21 example, how to address this stored value part. There may be 22 some tweaking to be done on that. 23 MR. DUNCAN: I agree completely with what he 24 said. 25 CHAIRMAN SMITH: All right. Somebody want to 0048 1 read, reviewed these. Not to endorse it, but to -- 2 MR. DUNCAN: Recommend it for public comment. 3 CHAIRMAN SMITH: Recommend it for public 4 comment. 5 MS. GREEN Motion to -- 6 MR. DUNCAN: You make them I’ll second. 7 MS. GREEN: Okay. 8 CHAIRMAN SMITH: Okay. 9 MS. GREEN: I motion to move this to move this 10 to Ed to -- for -- to put it to the public comment. 11 CHAIRMAN SMITH: Okay, all right. 12 MR. DUNCAN: I second it. 13 CHAIRMAN SMITH: All right. We have a motion 14 and a second. All in favor. 15 (Chorus of “ayes”) 16 CHAIRMAN SMITH: Any opposed. Okay. All 17 right. 18 MR. VANCE: If I may bring up. I know -- did 19 y’all appoint votes for the rule review? 20 CHAIRMAN SMITH: Not yet, sir. 21 MR. VANCE: Okay. 22 CHAIRMAN SMITH: That’s next on the list, 23 though. 24 MR. VANCE: Very good. 25 CHAIRMAN SMITH: All right. So we do need to 0049 1 rule review textbook? 2 MR. FARRELL: Yes. Yes, yes. Yeah, that’s 3 figure out which blue book you had. 4 CHAIRMAN SMITH: And I am of the understanding 5 that you will, you know, the rules that you’re going to be 6 going through -- 7 MR. FARRELL: No. Actually, for the -- 8 there’s two of them. This is rule for you based upon what 9 Tyler and the template. Take each one of the sections say 10 whether it needs to stay or go, basically. It’s still 11 relevant and not -- or there’s something they need to change 12 because it’s not relevant. Not changing how we’re going to 13 till the gift certificates. No. We still need the section 14 on gift certificates. 15 CHAIRMAN SMITH: Right. 16 MR. VANCE: Yeah. 17 MR. FARRELL: Kind of. But it’s an over -- 18 it’s a very high level review. So -- 19 MR. VANCE: Yes. Of the rules as they 20 currently exist, not with any of these modifications that are 21 pending, but just what’s in that blue book right now, a 22 review all the rules that are currently present and their 23 continued necessity or lack thereof. 24 MR. FARRELL: So if you have, like, we took 25 the license fees. There’s a spot there that says license 0050 1 CHAIRMAN SMITH: Needs to come out, right. 2 UNIDENTIFIED VOICE: So if there’s a section 3 on, you know, bingo cards with sliding windows, Nah, take 4 that off. Kind of deal. 5 CHAIRMAN SMITH: Right. So are you -- are you 6 going to give us a recommendation, guideline, of this one 7 needs to be changed, this one needs to be -- 8 MR. FARRELL: No I was -- 9 CHAIRMAN SMITH: You’re wanting us to do that. 10 MR. FARRELL: I was expecting that you would 11 go through it and you would say what you think needed to say 12 needed changed, that way I wasn’t driving the BAC in your 13 input. 14 CHAIRMAN SMITH: Okay. Well, what I’ve done 15 in the past -- well -- 16 MS. GREEN: Can we divide these up? Are they 17 -- do they -- do they have to be on the BAC? Because I would 18 like Sharon Ives to be involved. She works -- 19 CHAIRMAN SMITH: I think there’d be a few 20 general public members that I think would be very helpful to 21 help us go through these rule reviews. Somebody with a lot 22 more intelligence than what I may have. 23 MR. DUNCAN: How about Tyler? 24 MS. GREEN: Yeah. But Sharon, definitely. 25 MR. DUNCAN: We can always call. I mean -- 0051 1 question of the -- to the Chair of the Bingo Division. The 2 other is, I would say, you wanted this to be your project, or 3 product, so you don’t want too much influence from the staff. 4 But that doesn’t mean you we -- I won’t participate if you 5 want me to participate and sit and listen and help if there’s 6 some kind of other references. And Tyler will do the same 7 thing. 8 If there’s another reference in the law that 9 may be missing or is referenced in another section, we would 10 provide that to you. But I don’t want to drive it, nor would 11 we want the Lottery Commission to drive what your response 12 is. 13 We want you to be driving it to the 14 commissioners saying, We’ve taken a look at the rules, these 15 are the things that we think need to be -- can stay, are 16 still relevant, or I would say, if there’s any kind of 17 significant changes that need to be made. Like you talked 18 about licensing fees. 19 CHAIRMAN SMITH: Right. 20 MR. FARRELL: And this doesn’t preclude this - 21 - I hope it doesn’t muddy the water. It doesn’t preclude the 22 BAC recommending a rule change outside of the rule review. 23 If there’s something that you want to change in the rules 24 that’s outside of the rule review. But this is, basically, 25 just a rule review, overarching, still relevant, not 0052 1 MS. GREEN: Can we get another copy of this to 2 -- 3 MR. FARRELL: Yes. 4 MS. GREEN: Maybe two copies to work with. 5 MR. FARRELL: What I was thinking would be 6 helpful is if I give you the titles of all the sections, so 7 you have 401.1, it says this. Almost like a Table of 8 Contents. 9 CHAIRMAN SMITH: Yes. 10 MS. GREEN: Yes. 11 MR. FARRELL: We’ll get that -- we’ll get you 12 a Table of Contents, so you can see which ones go through. 13 But everything’s in the book. 14 CHAIRMAN SMITH: Right. 15 MR. FARRELL: And everything’s online, too. 16 MS. GREEN: We’re looking at the same thing. 17 CHAIRMAN SMITH: Melodye -- 18 MR. FARRELL: Hi, Bob. 19 CHAIRMAN SMITH: Hi, Bob. 20 MR. BIARD: Hi. I’m Bob Biard, General 21 Counsel. Y’all mind if I -- I thought I might just -- I know 22 that y’all talked about this before, but I’d like to hear -- 23 I’ve gone through this process, so I just like maybe give you 24 a little insight on it. 25 What we’ve done in the past is we’ve done it 0053 1 is Administration and there’s five rules under that. 2 Subchapter B is conduct of bingo, there’s 10 or so rules 3 there. 4 And the way we’ve done it in the past is we 5 look at each sort of subchapter and we say, Okay, Subchapter 6 A, Administration. And make a comment about whether -- what 7 the rules are and what the purpose of this set of rules is 8 and whether the reason for initially adopting them still 9 exists. And usually that’s going to be yeah. 10 Now, and then noting, well, are there any 11 particular changes in these rules that you would recommend? 12 And just note those. I mean, it does -- this doesn’t require 13 you to do a line by line of every single rule and talk about 14 it. But just sort of generally say, yeah, the reasons for 15 having these rules still exists. 16 And if there’s any changes you think we should 17 consider, say what they are. And if there’s any rules you 18 think we should do away with and repeal, then you say that as 19 well. And so that comes back, and then Tyler handed out, I 20 guess, the one that we did four years ago. I think that that 21 was the final document. 22 There’s two documents. First, we’re going to 23 be going to the commission in October and ask them to start 24 this process. And we’re going to publish a document that 25 just has all the rules listed saying -- for soliciting public 0054 1 back with a document that looks kind of like what Tyler 2 handed out. It’ll go through the subchapter and I’ve had 3 that discussion. I just talked about three subchapter here. 4 And as the commissioners sign off on that, this document sort 5 of becomes a blueprint for the next four years. 6 We’re not -- it’s not locked in stone. I 7 mean, this is kind of a check the box process for the 8 legislature. They want to make sure the agencies aren’t just 9 sitting over here not paying attention just letting the 10 regulations grow and grow and grow and get bigger and bigger. 11 They want to make sure there’s some sort of review process 12 that goes on. So you’re not locked in to anything, really, 13 that comes out of that process. It’s just that we have to 14 demonstrate that the agency went through that review process. 15 And then the document sort of is a -- we 16 understand that, you know, issues changed and, you know, 17 there -- something may happen that requires something that 18 wasn’t mentioned in the rule review that -- to be changed in 19 the rule. But none of that. You’re not restricted by 20 anything that comes out of this rule review process, which 21 one moves forward. But we will be bringing it back probably 22 in February or April next year to finalize it. And, of 23 course, by then the rules implementing House Bill 914 will 24 already be gone, so they’re, I mean, they’re kind of probably 25 not really going to be on the table for this. 0055 1 MR. DUNCAN: No he wants -- he wants ours. 2 Totally ours and, you know. 3 MS. GREEN: But can we see here before they go 4 would be -- 5 MR. DUNCAN: No. 6 MS. GREEN: See yours -- 7 MR. DUNCAN: We’ll be able -- if they do do 8 one, we’ll be able to comment in a public comment period 9 after that. 10 MS. GREEN: If we -- 11 CHAIRMAN SMITH: Melodye, I think that what 12 you’re wanting, they’re wanting to get the BAC’s input and 13 the industry’s input. I think this is our opportunity to 14 really look at the rules and they’re -- I think what they’re 15 saying is, is they’re really wanting to listen. So I think 16 we should take our own view on this and give them a very 17 wonderful product. 18 MR. BIARD: And the staff -- for the bingo 19 staff and for legal staff, we’re certainly available to 20 assist y’all in this process. Some of these things get a 21 little too technical and need to talk to some of our guys 22 about it, I mean, that’s all on the table. That’s all fine. 23 And we’re here to support the committee in that effort. 24 So I don’t want to just kind of throwing you 25 out there and lock you in a room sort of thing. 0056 1 recommendations. We’re happy to work with you in any way 2 that’ll help. 3 MS. GREEN: Well, I like to see about reducing 4 the rules. It’s overwhelming. 5 CHAIRMAN SMITH: Melodye, since you have a 6 really big interest in this, would you like to chair that 7 subcommittee? 8 MS. GREEN: Sure. 9 CHAIRMAN SMITH: Okay. Would you like to 10 recommend some people for that subcommittee? I would prefer 11 to not be on that subcommittee. 12 MS. GREEN: Oh, man. 13 CHAIRMAN SMITH: I will help as needed. But 14 I’ve -- I have a lot of irons in the fire right now. 15 MS. GREEN: We’ll call you. 16 CHAIRMAN SMITH: Call me anytime. Not in the 17 mornings, though. Because I work at bingo. Call me in the 18 evenings. 19 MR. GREEN: No. I would like to have a Sharon 20 Ives. Because she’s the bookkeeper and her knowledge of the 21 rules is very -- and probably one of those two there. 22 UNIDENTIFIED VOICE: But she’s not -- she’s 23 not going to practice law, is she? 24 MS. GREEN: I’m looking over there. 25 UNIDENTIFIED VOICE: She might. 0057 1 MS. GREEN: Sharon, I want you. 2 MR. BIARD: I would say whatever resources you 3 want people that aren’t on the Bingo Committee, whether you 4 want Steve, Steve F. Or Steven B. Or Sharon Ives or anyone 5 else. I mean, that’s your prerogative. 6 MR. DUNCAN: I’m leave -- I’m leaving town. 7 CHAIRMAN SMITH: Is there -- is there anybody 8 -- is there anybody that would like to be on the 9 subcommittee? Even from the general public? 10 UNIDENTIFIED VOICE: If we can meet in Dallas 11 on like GoToMeeting. 12 MS. GREEN: That’d be great. I like the idea. 13 MR. BIARD: Yeah. We could do phone -- we 14 could do phone calls, too. 15 MS. GREEN: Right. 16 MR. BIARD: If y’all want to do that. 17 MS. GREEN: Jason, would you like to call in? 18 Is it --? 19 MR. POHL: Yep. 20 CHAIRMAN SMITH: Tommy, are you going to be on 21 that? 22 MR. DUNCAN: Yeah, I guess so. 23 CHAIRMAN SMITH: Reluctantly. 24 MR. FARRELL: Let me -- let me pass this 25 along. Logistically if you want to do a phone conversation, 0058 1 MR. DUNCAN: Well, I have a line for that. I 2 have a line. 3 MR. FARRELL: Yeah. But I’m saying if you 4 needed that, we could provide that. If you were going to do 5 it in Austin and you need a room we’d help you -- we could 6 help you find a room to -- Dallas I’m not so good at. 7 MR. DUNCAN: Well, she’d provide the room in 8 Dallas, or Sharon and -- 9 MR. FARRELL: Well, I’m just saying, is 10 logistically we’ll provide the support. 11 CHAIRMAN SMITH: What is the deadline that you 12 would like this close to completed or completed by? Do you 13 have a ballpark? We won’t hold your feet to the fire. 14 MR. BIARD: Well, I think we’ve -- I know we 15 talked about trying to give something back by December, and 16 that’s not hard and fast deadline. Like I say, I think we 17 have six months at the far end. But ideally what we’d like 18 to do is bring it back to the commissioners at the February 19 commission meeting. 20 CHAIRMAN SMITH: Okay. 21 MR. BIARD: Which is probably going to be the 22 first or second Thursday in February. 23 MR. DUNCAN: So maybe by the first of the year 24 as a soft like -- 25 MR. BIARD: Right. But, also, but there 0059 1 know, just like all deadlines, you know, if you said -- If I 2 said, Okay, you don’t have to have it until March, I know -- 3 I just, you know, I just wanted to make sure that, you know, 4 I don’t -- we don’t get a situation where, you know, we 5 haven’t done enough work, and we kind of run up again into a 6 time crunch. And so, you know, December is not -- the first 7 of the year I think is more -- but January would be better 8 than December, I would think. 9 CHAIRMAN SMITH: Okay. So I have Melodye as 10 the chair. Sharon Ives, Tommy Duncan. Anybody else want to 11 help? Mr. Fenoglio, would you like to assist on that as 12 needed? 13 MS. GREEN: And Jason. 14 MR. POHL: And put me on there as well, 15 please. 16 CHAIRMAN SMITH: Good. 17 MR. BIARD: But I don’t have any problem 18 waiting till April to bring this back to the commission. If 19 you all feel like you want more time, that’s okay. That’s 20 the absolute outside. 21 CHAIRMAN SMITH: Okay. 22 MR. BIARD: But we’re probably -- see, we’re 23 doing this for the other -- the Lottery Rules, we have some 24 General Administration Rules, we may be bringing them back at 25 different times. But there’s nothing wrong, I mean, if we 0060 1 something back to you before the end of the year. 2 MR. BIARD: Okay. 3 MS. GREEN: Just to start with. And if we 4 could get one more copy for Sharon, she doesn’t have one. I 5 think -- 6 MR. DUNCAN: She said we can make 7 recommendations on other rules besides what’s in here. Like 8 -- is that what you said, Michael, and so we -- 9 MR. FARRELL: I said outside of the rule 10 review. You can always recommend changes to the rules. So 11 outside of the rule review, you could recommend changes. But 12 the rule review -- the rule review in particular is whether - 13 - whether their reason still exists, are there generally any 14 changes, or they need to be repealed. That’s it. That’s the 15 reason for the rule review. Thank you. 16 MS. GREEN: Thank you. 17 MR. FARRELL: I know it was very helpful. 18 Anything else? 19 CHAIRMAN SMITH: Thank you, sir. 20 MR. FARRELL: Who’s -- did I say anything 21 about Trace? 22 MS. GREEN: No. You can leave those. 23 MR. FARRELL: It’s only -- it’s only about for 24 the rules. 25 AGENDA ITEM 8 0061 1 nominations by a Charity Representative and a General Public 2 Member. You should’ve got a handout. 3 MR. FARRELL: Yeah so I -- on that there, 4 Trace, I’m not expecting you to make a decision today. I’m 5 expecting you to take a look at the list and if you could 6 tell me if there’s good or not good based upon what the 7 information you have. 8 I will tell you that the General Public, 9 knowing what was said here, the General Public, the only 10 person we have for the General Public, is an active officer 11 and a treasurer for a charitable organization or conductors, 12 so that didn’t meet with you exactly wanted. But we do have 13 some people who are conductor lessors there underneath the 14 Charity Rep part that are real -- that are viable candidates. 15 I have not called anybody yet, because I want to make sure 16 you saw the list first. But I’ll be making some telephone 17 calls with -- I intend to make some telephone calls within 18 the next week and a half, two weeks, just to make sure that 19 they’re all still on the list and that we would present 20 whoever the recommendation is based upon conversation is we - 21 - that we would present it to the commissioners. The list of 22 people would be presented to the commissioners with your 23 recommendation if you have a recommendation. If you don’t 24 have a recommendation then well, fine, then I would say 25 that’s okay, too. 0062 1 MR. FARRELL: I would -- yes. I would suggest 2 that that’s a fairly good plan, because we do want to present 3 the names at the October commission meeting. 4 CHAIRMAN SMITH: Okay. You wanting to present 5 all of the names, or just the ones for recommendation? 6 MR. DUNCAN: Well, the bottom four aren’t 7 charity lessors. Is that why you separated those? 8 MR. FARRELL: Probably a typo with the extra 9 space. 10 CHAIRMAN SMITH: So we’ve got seven 11 recommendations for charity lessor. 12 MR. FARRELL: Well, it’s real -- and real -- 13 in reality the bottom four are not charity lessors, conductor 14 lessors. So they don’t meet the requirements. But they did 15 put in the application with their names, so I put them on the 16 list. The first one in the General Public, that’s the only 17 one that checked the General Public box on their application. 18 And that does not mean what you recommended and the 19 commission agreed with you. Was that it’s just somebody who 20 plays bingo or member of an organization prior to -- that 21 isn’t currently a conductor. And Cory Harris is, right now, 22 is a conductor. 23 CHAIRMAN SMITH: Okay, all right. 24 MR. FARRELL: Executive Officer and somebody 25 who is a conducted bingo halls. 0063 1 MR. FARRELL: That those are the top three of 2 the people who are -- meet the requirements. 3 MS. GREEN: Does any -- does anybody know 4 them? 5 CHAIRMAN SMITH: I have had a recommendation, 6 I had a phone call, recommending Veronica. I was told she’s 7 a good operator, a good person. Is very smart and knows what 8 she’s doing. She’s -- I don’t know her personally. Do you 9 know her? 10 MR. DUNCAN: I mean, just in meeting here or 11 there at a meeting or something. But she’s local. I don’t 12 have any problem with if you would recommend. 13 CHAIRMAN SMITH: I don’t have any issues with 14 that. 15 MS. GREEN: Local makes it easier. 16 MR. FENOGLIO: Who are the three? 17 CHAIRMAN SMITH: The three that are on our -- 18 recommended are Veronica Uriegas from Austin, Texas; Johnny 19 Franklin from Lubbock, Texas; and Margaret Baldwin (ph) from 20 Three Rivers, Texas. Any comment on those three from anyone? 21 Sir. 22 MR. FENOGLIO: I know Veronica Uriegas. She’s 23 certainly knowledgeable about bingo. My guess is if she were 24 here, were nominated, she’d show up. She’s -- 25 CHAIRMAN SMITH: Well, that’s two 0064 1 UNIDENTIFIED VOICE: I have it. 2 CHAIRMAN SMITH: You’ve got it? Okay. Did we 3 want to go ahead and recommend her for membership, then? 4 UNIDENTIFIED VOICE: Yes. 5 CHAIRMAN SMITH: Somebody want to make a 6 motion for that? All right, motion from Jason. Second from 7 Will. All in favor say aye. 8 (Chorus of “ayes”) 9 CHAIRMAN SMITH: Any opposed? All right. 10 Veronica Uriegas is our recommendation, sir. So we will need 11 you to present that at the next commissioner’s meeting. 12 Correct? 13 MR. FARRELL: Well, I -- you are I will say 14 that that’s the -- when we give them the list I’ll annotate 15 that that’s the one that you recommend. 16 CHAIRMAN SMITH: Okay. I think we’ll double 17 tab that one since it will give me something to say in the 18 meeting. 19 MR. FARRELL: But the other thing you could 20 do, because the general public is empty, you could make a 21 recommendation to the commissioners to say, Fill it with 22 somebody who’s not -- that’s in the bingo industry, you know, 23 conductors with -- or, you know, an officer on a -- on a 24 charitable organization. You can make that recommendation to 25 fill the seat. The commission can, if there’s a vacancy 0065 1 statute? I was under the assumption it was by rule. 2 MR. FARRELL: I have to look. Let me look. 3 CHAIRMAN SMITH: And I don’t think there’s 4 anything in the statute about BAC’s committee. 5 MR. FARRELL: If there’s not an individual 6 it’s 402.102, Bingo Advisory Committee, A, B -- it’s B3. If 7 there’s not an individual to represent one of the required 8 interest groups, the commission may appoint a member from the 9 remaining interest groups. 10 CHAIRMAN SMITH: Okay, so -- 11 MR. FARRELL: So what I would say is, if -- I 12 would prefer that the BAC make that determination, because 13 this -- you are the group. And you could pick from any of 14 the seven people, you could make a recommendation from any of 15 the seven people that apply. If you were to make that 16 recommendation on the applications or if there’s another way, 17 another person you think it should be on it, that’s -- but 18 the application period closed last Friday. 19 MR. MARTIN: I’d like to say this three under 20 now. But we need to get somebody from the Houston are there. 21 MR. FARRELL: Well, I would also say that you 22 do want to look at geographic diversity across the state at 23 the same levels that everybody just isn’t sitting in Austin. 24 I know we’re not, but get some. 25 CHAIRMAN SMITH: I think what we would 0066 1 member. Once they open that up or once they say yes or no, 2 they can look at the ones we have and I think you’re probably 3 right. We probably need to get somebody from a 4 geographically different location. 5 MR. MARTIN: Well, I see someone in Harris 6 County. 7 CHAIRMAN SMITH: Right. 8 MR. MARTIN: In that area over there. 9 CHAIRMAN SMITH: Okay. Well, we will, with 10 the board’s permission, I will recommend that we open it up 11 to other applicants to fill that public member position. 12 MR. FARRELL: If I could be so suggestive 13 here. 14 CHAIRMAN SMITH: Yes, sir. 15 MR. FARRELL: Is you might want to have a name 16 in your back pocket of the folks that applied so if the 17 commission says yes, you may be able to offer it to them or 18 say, This is what we recommend. And then we can go forward 19 from there. Is that -- Tom, you don’t see any problem with 20 that, do you? 21 MR. DUNCAN: I don’t think so. 22 MR. FARRELL: I think that way you’re closing 23 the timeline. To be safe, then it’s another two-month period 24 before approving. This way they can get on -- or, in theory, 25 because October, whenever your meeting is after October, 0067 1 know Marie or any of the other applicants? 2 MR. MARTIN: I’ve met her twice, she’s been 3 here to Austin and participated in capitol days. 4 UNIDENTIFIED VOICE: Oh, well that’s great. 5 CHAIRMAN SMITH: Okay. I’m open. I don’t 6 have an opinion on this. 7 MR. FARRELL: Okay. Well, let me do this for 8 you there, Trace, I will call the other folks on the list. 9 UNIDENTIFIED VOICE: Make sure they still want 10 it. 11 MS. GREEN: Right. 12 MR. FARRELL: Make sure they know they’ve got 13 to come to Austin and it means during the day. Even though 14 we said that on all the applications, is that and they’re 15 going to have to pay their own way. We’ll call and make sure 16 that they all understand that say that they are candidates 17 for position on the BAC and to make sure that they are still 18 willing to do that. 19 But -- and I will get that to you -- hopefully 20 somebody will get that to you by the, you know, by a week. 21 CHAIRMAN SMITH: Okay. I’m okay with that. 22 Everybody all right with where we are with that? All right, 23 good deal. 24 AGENDA ITEM 9 25 CHAIRMAN SMITH: Okay, all right. Fun times. 0068 1 MR. KELLER: On this putting two sets of cards 2 -- 3 CHAIRMAN SMITH: Come stand so we can get your 4 -- here you go, Chris, right here. 5 MR. KELLER: Okay. My name’s Chris Keller and 6 I guess I’ll talk about trying to put two sets of 66 cards on 7 one machine. Is that still on? Okay. 8 CHAIRMAN SMITH: You got the floor. 9 MR. KELLER: Okay. Well, that’s -- I want to 10 stress that right there. It’s not -- what I’m trying to do 11 is change the rule to where you can put two sets of 66 cards 12 on one machine. It would not be one machine with 132 cards, 13 there would have to be a separate charge for the -- each set 14 of 66 cards. 15 CHAIRMAN SMITH: Say that one more time. 16 MR. KELLER: The rule change would be worded 17 where you could put set two sets of 66 cards on one machine, 18 not 132 cards on one machine. It would be -- there would 19 have to be a separate charge for each pack of 66 cards. 20 In other words, if you sell a computer for $5 21 and somebody said, Give me two. You’d hit that 66 button 22 twice, be $10, unless you wanted to change the pricing on 23 something. So there would have to be a price associated with 24 each pack of 66 cards. 25 I contacted a lot of halls across the state. 0069 1 the phone said, Yes, this would be good for bingo. Now the - 2 - but a lot of those said, I have to ask the owners or the 3 operator. You know. And so, a lot of those I did not get 4 any other feedback other than from a manager. 5 CHAIRMAN SMITH: When you say bingo, when you 6 say it would -- it would help in bingo, who specifically 7 would it help, the operator, the customer, the charity? 8 MR. KELLER: It would help the charities 9 operating bingo for sure. Can I tell you what I discovered? 10 CHAIRMAN SMITH: Sure. We’re all ears. 11 MR. KELLER: Or what my thoughts are on this 12 is that I know this, that the majority of -- or all games in 13 the state look for ways to sell a computer and get more money 14 out of the customer at the point of sale. Either with 15 optionals, early birds, or by bundling the machines, you 16 know, you buy three for x amount of dollars. And we would 17 for sure -- or we all, for sure, rely on buying -- a customer 18 buying more than one machine in your hall. Every game in the 19 state relies on multiple sales of the computer to the 20 customer. 21 And this rule change would give us the 22 opportunity to do so without using more machines. Maybe, 23 maybe even lower the number of machines necessary to have in 24 stock. This rule change allows us the opportunity to 25 increase our inventory by having less machines, and therefore 0070 1 reduce your inventory -- I’ve got some examples here. Like, 2 on the conservative side, I’ve got 300 units. I might reduce 3 my inventory 10 percent, say. Take out 30 units. That’s 4 going to save the charities $15,600 a year. Now on a -- on a 5 not so conservative side, but maybe realistic, I might be 6 able to reduce my inventory by a third. That would save the 7 charities $52,000 a year. 8 But on an even more important point here, I 9 spoke with Gary here in Austin at a bingo hall, he’s an 10 assistant manager. I had a lengthy conversation with him. 11 He put me onto the thought of creative pricing on your -- on 12 this -- with this rule change. Meaning instead of bundling 13 the computers, say, and, you know, you can buy 3 for $20, 1 14 for $10, and 3 for $20, whatever it might be. And I’m really 15 leaning toward this rather than reducing inventory is doing a 16 creative pricing scheme where maybe I’d tell the customer one 17 computer is $8, you can buy two for $12. You can put two 18 sets on the same machine for $12. So again -- 19 CHAIRMAN SMITH: Okay. So let me -- let me 20 ask you -- let me ask you. How is that related to what 21 you’re talking about on the 66 cards on each per sale? I’m 22 sorry. You get 132 cards in a computer. How does that 23 bundling -- how does that relate to that? 24 MR. KELLER: Well, I think that we could get 25 creative and I’m saying instead of saying -- 0071 1 MS. GREEN: No. I understand what he’s 2 saying. At first, Chris, I thought you were -- I know it’s a 3 problem with -- you said yours is $5. I mean, we don’t do 4 that up there in Dallas, but then we don’t have the kind of 5 crowd you have, either. But before you, when you were here, 6 you were talking about trying to keep the price level. So if 7 you do 66 and 66, which $5 -- I thought you were saying it 8 needed to be $5 again. But now you’re saying that it could 9 be five and one. I think you’re going to get into the same - 10 - I know you fight with that. 11 MR. KELLER: I would love to have a minimum 12 price on there. But it seems to be, and I was going to get 13 to that next, really. Well, I’ll just say it now. Out of 14 the operators that I spoke to, and these are major operators 15 in the state, it’s not just -- these are people that have 16 multiple locations in the state that are really rapid growing 17 concern about putting minimum price on the computer. I’ve 18 always been for that. There seems to be a lot more people 19 that say, We need to have a minimum price. 20 CHAIRMAN SMITH: And what would you suggest 21 the minimum price be? 22 MR. KELLER: I would leave that up to the 23 industry. Just, I mean, I would be on board for -- I would 24 hope with the discussion say put a minimum price at $8 a 25 unit, you know. 0072 1 CHAIRMAN SMITH: Because if you put a minimum 2 price on there, I think there’s a lot of operators out there 3 that offer less cards for less money. I offer -- I offer a 4 computer for $5, but you only get 10 cards in it. So that 5 would put me underneath the minimum price of $8. 6 MR. KELLER: Correct. 7 CHAIRMAN SMITH: So there’s a fly in the 8 ointment there. 9 MR. KELLER: You could get money. 10 CHAIRMAN SMITH: Yeah. 11 MR. KELLER: But that’s why I was kind of 12 leaving -- I’m just letting you know that there was more than 13 three operators, there were several, that mentioned, We need 14 to have a minimum price. But I don’t want to even really 15 bring that up. I just -- I’d like to see this get in there 16 where we can at least put it up for a vote in the state or 17 something to allow two sets of 66 cards on one machine. 18 I’m going to end it with this right here. 19 Well, this was brought up by another operator in Houston. 20 But he said, Please mention this. So I will. That prices 21 are getting so low in the state right now that there is, in 22 his opinion there’s going to be a computer shortage from the 23 manufacturers. In other words he said, I’ve got x amount in 24 stock right now and I’ve been told my -- by my supplier I 25 can’t get any more. So, which is going to drive people to 0073 1 But it’ll give us a chance to give extra value 2 to our machines, and I know that it would increase revenue at 3 the point of sale. I know it would increase our revenue at 4 the point of sale. And I’m going to say this, it would be 5 difficult for an operator not to increase revenue by putting 6 two sets of 66 cards on one machine as opposed to having two 7 separate machines with 66 cards on each machine. 8 I don’t know where we go from here, but I’ve 9 pitched it out again, so -- 10 MS. GREEN: Well, have you -- have you spoken 11 to distributors and can they add that 66 without raising the 12 price? Or are they just going to raise it anyway because 13 they can? 14 MR. KELLER: Well, it’d be the manufacturers 15 would have to change their thing on their, but -- 16 MR. DUNCAN: Well, we had -- we had to Floyd 17 from the BKC speak last time on the cost associated with 18 going back to the lab and everything. And prices are pretty 19 cheap in Texas, so we’re starting to do some inventory. They 20 -- we said they would raise their prices through the 21 distributor, so -- 22 MS. GREEN: That’s what I’m afraid of. You 23 know, in theory there’s not really -- 24 MR. DUNCAN: And it’s not the distributor, 25 it’s the manufacturer. 0074 1 far as price fixing, I mean, I understand that and it’s very 2 frustrating, but I’m just going to always be against any sort 3 of -- any sort of a price fixing; the lottery can tell us 4 what to sell it for. You know. Either -- I wish there was a 5 minimum. I think we respected our minimum in Dallas we just 6 talk to each other, and we’ve not done that. But I don’t -- 7 also I don’t have any competition. I don’t have the people - 8 - 9 MR. FENOGLIO: You didn’t say that, Melodye. 10 MR. KELLER: But it’s not -- it’s not price 11 fixing, it’s just a minimum price. 12 MS. GREEN: We’re not fixing, we just wouldn’t 13 -- then we haven’t gone after each other with a -- 14 UNIDENTIFIED VOICE: Price war. 15 MS. GREEN: Yeah, a price war. But I’m just 16 going to be against any price fixing. 17 MR. KELLER: Okay. Well, it’s not fixing. 18 It’s not price fixing. 19 MS. GREEN: I know. 20 MR. KELLER: It’s minimum price. They already 21 have a minimum price on the machine, by the way. 22 MS. GREEN: Who? What is it? 23 MR. KELLER: Lottery. They have a minimum 24 price on the machine that you can sell it for. 25 MS. GREEN: What? A penny? 0075 1 MR. KELLER: I’m just saying raise the minimum 2 price. That’s -- it’s that simple. Just raise the minimum 3 price. 4 UNIDENTIFIED VOICE: You went from a $8 to a 5 penny. 6 UNIDENTIFIED VOICE: All right, there’s no 7 free bingo. 8 MS. GREEN: No free bingo. 9 MR. KELLER: I can tell you this, though ma’am 10 too, that whenever video came in, in the Bexar County market, 11 at one time Bexar County had 80 percent of their entire stock 12 of computers. And that’s in the -- in the whole United 13 States, they had 80 percent of their stock. So whenever the 14 major player that had 2000 plus units of theirs switched 15 units, Video King didn’t go up on me, because they just lost 16 2000 units in Bexar County. They didn’t raise my price. Or 17 any -- 18 CHAIRMAN SMITH: Does any members of the BAC 19 want to take any action on this? Any recommendations? 20 UNIDENTIFIED VOICE: No. 21 CHAIRMAN SMITH: Okay. Thank you, Chris. We 22 appreciate you very much, sir. 23 MR. KELLER: So let me ask you now, what is my 24 next step, Trace? What am I supposed to do? 25 CHAIRMAN SMITH: I don’t know. I don’t know. 0076 1 do all end all here. I’m just a guy sitting behind a 2 microphone, that’s it. I’m that operator just like you when 3 it comes down to it. And, unfortunately, I do sympathize 4 with what you’re going through, because I’ve been through it, 5 and I know it’s no fun. But I don’t, unfortunately, I don’t 6 have all the answers. 7 MR. KELLER: Okay. 8 MR. MARTIN: I think you need to work maybe 9 closer with the manufacturers and the distributors and find 10 out what kind of price increases. Maybe they would -- 11 MR. KELLER: Well, I really don’t think that 12 there would be a price increase. I mean, if my distributor 13 comes to me and says, Hey, I’m going to have to go up on your 14 units, because you have less in stock. I might go to Tommy 15 and say, Tommy, what kind of deal will you give me? 16 MS. GREEN: Well, I don’t think it’s less of 17 stock, they had to go back and change the stock, though. 18 They had to change the whole -- or add a software thing to 19 it, and it would be quite a -- just saying. 20 MR. KELLER: I don’t know. I mean, it’s just 21 the price of doing business in Texas. They do it in other 22 states. I don’t know, I’m pretty frustrated by the whole 23 situation now, because I spent a lot of time on this deal. 24 And I’m telling you right now, there’s no way that it would - 25 - there’s no down side to this at all. There’s just not. It 0077 1 A matter of fact, I’d put my name on it. Put 2 my name on the rule, the Keller Rule. And then if it falls, 3 goes south, everybody can come knock on my door and say, You 4 dumb shit and look what you did. I’ll tell you that. 5 CHAIRMAN SMITH: We wouldn’t want to do that 6 to you, Chris, we love you, brother. 7 MR. KELLER: Well, like I say, Trace, I’m 8 pretty frustrated now about this whole situation, because I 9 feel like I’m not getting any response from the BAC here on 10 this deal. 11 CHAIRMAN SMITH: Well, I think you’re getting 12 quite a response. We’ve had experts testify and tell you 13 that this is the cost that would be associated with the 14 software changes. We’ve all listened and I don’t know what 15 else to do. We’re listening to you. We can’t make the 16 decision for you. There are other operators in the state 17 that don’t agree with that, and that I’ve spoken to. 18 MR. KELLER: Well, I don’t know, I mean I’ve 19 got a pretty good list of people that were on board. And, 20 like I say, they’re not -- they’re not lightweights. They’re 21 -- 22 CHAIRMAN SMITH: Yeah, nobody’s doubting -- 23 nobody’s doubting your credibility, Chris. 24 MR. KELLER: Well, respected operators in the 25 state that have multiple halls. So -- all right. 0078 1 Mr. Keller had to say? 2 AGENDA ITEM 10 3 CHAIRMAN SMITH: All right. Any new business 4 anyone? Nada? All right. Any public comment new business? 5 Nope. All right. 6 AGENDA ITEM 11 7 Chairman Smith: Let’s set the date for the 8 next meeting. Michael do you have any recommendations? 9 MR. FARRELL: You want to do it in October, or 10 November? 11 CHAIRMAN SMITH: How about January? 12 MR. FARRELL: I don’t have January’s calendar 13 with me now, so, you know, that’s fine. 14 CHAIRMAN SMITH: Okay -- 15 MR. FARRELL: I do have January’s calendar. 16 When do you want to do it? Do you want to do December? I 17 can call that calendar up too. 18 CHAIRMAN SMITH: Is the commissioners’s 19 meeting still on the 10th at 10:00 a.m.? Or are they -- 20 MR. FARRELL: Yes. 21 CHAIRMAN SMITH: They did -- they hadn’t moved 22 that one? 23 MR. FARRELL: Tenth at 10:00 a.m.? 24 CHAIRMAN SMITH: Yeah, okay. 25 MR. FARRELL: Yep, that’s still on the 0079 1 look at November. Is that correct? Anybody got any 2 recommendations? 3 MR. MARTIN: I’d like to do the week of the 4 18th through the 22nd, somewhere in there. 5 CHAIRMAN SMITH: I’m good with that. Anybody 6 else? Everybody good with that? 7 MS. GREEN: It should -- this room should be 8 available. It shouldn’t be a problem. 9 CHAIRMAN SMITH: Eighteenth through the 22nd, 10 okay. Any particular day, Michael, better for you? 11 MR. FARRELL: No. That’s far enough in 12 advance that days are pretty clear right now. 13 CHAIRMAN SMITH: Tuesdays and Thursdays work 14 better for me, since nobody’s going to say anything. I’ll 15 say. 16 MS. GREEN: Well, we’d look maybe on Tuesday, 17 because you’re getting really close to Thanksgiving and all 18 that mess there. 19 CHAIRMAN SMITH: Sure, 19th? 20 MS. GREEN: Actually, yeah. 21 CHAIRMAN SMITH: 10:00 a.m.? 22 MR. MARTIN: Now is that November? 23 CHAIRMAN SMITH: Yes, sir. 24 MS. GREEN: Yeah, November, on November 19th, 25 maybe. 0080 1 10:00 a.m. in Room 19. All right, anything else, Michael, 2 sir? 3 MR. FARRELL: That’s all I have. 4 AGENDA ITEM 12 5 CHAIRMAN SMITH: All right. Yes, sir. 6 UNIDENTIFIED VOICE: I make a motion that we 7 adjourn. 8 CHAIRMAN SMITH: And a motion to adjourn. I 9 will second that. All in favor say aye. 10 (Chorus of “ayes”). 11 CHAIRMAN SMITH: This had better not be any 12 opposed. 13 (Meeting adjourned at 11:37 a.m.) 14 15 16 17 18 19 20 21 22 23 24 25 0081 1 STATE OF TEXAS ) 2 COUNTY OF HARRIS ) 3 I, Kimberly C. McCright, Certified Vendor and 4 Notary in and for the State of Texas, do hereby certify that 5 the above-mentioned matter occurred as hereinbefore set out. 6 I FURTHER CERTIFY THAT the proceedings of such were 7 reported by me or under my supervision, later reduced to 8 typewritten form under my supervision and control and that 9 the foregoing pages are a full, true and correct 10 transcription of the original notes. 11 IN WITNESS WHEREOF, I have hereunto set my hand and 12 seal this 28th day of September, 2019. 13 14 /s/ Kimberly C. McCright Kimberly C. McCright 15 Certified Vendor and Notary Public 16 Verbatim Reporting & Transcription, LLC 1322 Space Park Drive, Suite C165 17 Houston, Texas 77058 281.724.8600 18 19 20 21 22 23 24 25